Monday, April 12, 2010

Who pays for smart technology? At the end of the day, funding likely may come from a combination of taxpayers and ratepayers (often, of course, one and the same). Certainly, industry is pushing in that direction.

Thus, the big smart technology story this month comes from the efforts of The Climate Group, an international coalition (spearheaded by Google) of private companies, governmental units, and environmental NGOs. On April 5th, the Group released an open letter to President Obama, calling on the Administration to adopt the goal of providing every household with real time information about their electricity use. The letter states that “[b]y giving people the ability to monitor and manage their energy consumption, for instance, via their computers, phones or other devices, we can unleash the forces of innovation in homes and businesses." The text can be found here.

The letter recommends that the Administration launch a White House-led research program to work out the best way of providing consumers and businesses with energy use information, while establishing effective privacy rules. The letter also calls for the Administration to direct federal agencies to ensure that the availability of energy data will be part of a wide range of existing low carbon and energy projects, such as home weatherization, energy efficiency grants, appliance standards, home and commercial building programs, and clean technology R&D funding programs.

In fact, the Administration already has signaled strong support for smart grid technologies, earmarking billions under last year's economic stimulus package for the roll-out of some 18 million smart meters. But the Administration has thus far declined to set a target date for the universal roll out of smart meters – or actually call for smart meters installation as a federal mandate.

At the same time, of the over 50 signatories to letter, many – notably, Google, AT&T, Intel, General Electric, Hewlett-Packard, Honeywell, and Verizon – are companies with a vested interest in the development of new smart meter and smart appliancetechnologies. For example, Google has heavily invested in itsrecently launchedPowerMeter online toolset, a Google Gadget that can be installed on a home computer, providing a graph of how much electricity is being used throughout the day (seehere).

This call for federal action, which can certainly be interpreted as a call for government support of commercial applications, highlights once again that, whatever the long-term consumer benefits of smart energy technology, that technology won’t come cheap. And its implementation may well take significant governmental action and expenditure, both here and abroad (e.g., a number of European have set target dates for the universal roll out of smart meters). The $64 question – will ratepayers and taxpayers be prepared to foot the bill? Will they see the consumer benefits, or view smart technology as something that benefits the utilities and large technology companies?

And a parallel question: will industry move forward without the promise of either government funding and/or (in the case of utilities) PUC authorization of recovery through rates of smart technology costs? Certainly, in the case of smart meters, that technology at least is only being installed where State PUCs are authorizing rate recovery.

In that regard, and following up on Post # 8, the California Public Utilities Commission (in a 3-2 vote) gave Southern California Gas the go ahead to bill consumers for installing radio-controlled smart gas meters on six million homes. The massivesmart meterproject for Southern California Gas, which spans from Fresno to the Mexican border, is expected to cost $1 billion.